New orders for manufactured durable goods declined by 2.8% in July, marking the third decline in four months, but rising orders for the “core capital goods” subset of that total signaled an increase in business spending.
Orders for manufactured durable goods decreased by $8.8 billion to end the month at $302.8 billion, the Census Bureau said in a Tuesday (Aug. 26) press release.
July’s drop in orders for durable goods followed a 9.4% decrease in June, according to the release.
The decrease was driven by transportation equipment, as that segment was down 9.7% or $10.9 billion, ending the month at $101.7 billion, the release said.
Excluding transportation, new orders increased 1.1%, per the release. Excluding defense, they decreased by 2.5%.
Reuters reported Tuesday that “core capital goods,” or non-defense capital goods excluding aircraft, showed strength in both orders and shipments.
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According to a table released Tuesday by the Census Bureau, non-defense capital goods orders increased 1.1% in July after declining 0.6% in June, while shipments increased 0.7% after rising 0.4% the previous month.
The Reuters report said that growth in this category, which is considered to be a proxy for business spending, contradicted other surveys that reported that businesses were being more cautious due to the cost of new tariffs on imports.
The increase in these core capital goods orders, at 0.7%, was greater than expected, as economists had forecast a rise of 0.2%, according to the report. The rise in shipments was the greatest since April 2023, per the report.
Christopher Rupkey, chief economist at FWDBONDS, told Reuters: “Business investment is strong, which makes the economic outlook a little less uncertain at least for now.”
S&P Global said Thursday (Aug. 21) that in August, new orders in the manufacturing sector reached the highest level since February 2024 and output growth accelerated to its fastest pace since May 2022.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a press release that the new order inflows were driven by rising domestic demand and the greatest increase in exports seen in 15 months.
“While support from policies such as tariffs helped lift manufacturing optimism in August to a level well-above the post-pandemic average, the degree of optimism in the goods-producing sector remained below January’s recent high, reflecting concerns over higher costs and the impact of geopolitical uncertainty, especially in relation to international trade and supply chains,” Williamson said in the release.
